Southwest Trains and Network Rail Wessex ‘Deep Alliance’ ends two years early

Published: 27th June 2015

Another McNulty recommendation bites the dust or is it more Government intervention?

The Wessex Rail Alliance was introduced by the Government three years ago as a result of the McNulty ‘Value For Money’ report on the UK Rail system. The report was much lauded when published and the Wessex Alliance was formed as one of the recommendations and scheduled to run for a minimum of five years. It was hailed as a first for the UK rail industry and the way forward in the search for reducing costs and improving services.

It was approved by the Department for Transport (DfT) and the then Office of Rail Regulation, (ORR) and was due to run until 4 February 2017, the expiry date of the South West Trains franchise agreement. The Alliance has thus been ended without warning two years early while the SWT franchise has been extended two years by the DfT.

The PR surrounding the Alliance announced ‘Better rail services in the south and south-west of England’ with a joint management team seeking to reduce delays, offering better customer service, deliver better disruption management and to improve the efficiency of the railway.

This was to be delivered through more collaborative working and better decision-making but seasoned rail professionals questioned how this could be possible when the complex contractual matrix between Stagecoach Southwest Trains, the DfT and Network rail remained in place. In fact, the 98 page Wessex Alliance contract clearly states that the Alliance Agreement would not supercede the contracts already in place between Government, Stagecoach and NR.

How can this help…………….?

How this arrangement could truly benefit passengers was always the question being asked and the fact that a very terse press statement was personally issued by the NR Media chief reflects the nervousness about ending it all with adverse publicity. Remember, ‘The Alliance’ was announced to deliver a key element of the Government’s Rail Command Paper, issued in March 2012.

They said:

NR’s Chief Executive at the time, David Higgins said; "This marks a new phase in the evolution of Network Rail as we continue to push decision making away from the centre, empowering our front-line managers to run the railway more effectively, and forging closer working relationships with our customers, the train operators.

The Alliance was to explore finding more cost-effective and efficient ways of delivering their respective activities on the Wessex Route, to sustain, and where required, improve the service delivered to passengers and other users of the Wessex Route while reducing costs.

One part of the Agreement states that they should share and develop their respective learning and understanding of one another's operations on the Wessex Route. This is worrying as rail industry staff should be aware of what running a busy rail network requires and delivering better performance should be a day to day priority.

What did the contract say?

Section 4.8 Access Agreements clearly states that:

(a) The Parties acknowledge and agree that it is not their intention that this Agreement should amend any Access Agreement between them and agree that this Agreement should be construed accordingly.

(b) If any provision in this Agreement should, at any time in the future, have or be deemed to have the effect of amending or giving rise to a purported amendment to an Access Agreement, such provision shall to that extent be deemed not to form part of this Agreement but the validity, legality and enforceability of the remainder of this Agreement will not be affected, provided that the operation of this clause 4.8 would not negate the commercial intent and purpose of the Parties in entering into this Agreement.

(c) The Parties agree and undertake to comply with their respective obligations under the Access Agreements between them as if this Agreement were not in place.

4.9 Revenue Support

In relation to the operation of schedule 4 and schedule 8 of the Track Access Agreement (Schedules 4 and 8 Regime) and the revenue support mechanism under the Franchise Agreement (DfT Revenue Support), each Party agrees:

(a) to act in good faith in relation to the operation of the Schedules 4 and 8 Regime and DfT Revenue Support;

(b) it shall operate the Schedules 4 and 8 Regime and DfT Revenue Support as if this Agreement were not in place;

(c) it shall not behave in a manner or take steps intentionally and/or solely designed or intended to manipulate the operation of the Schedules 4 and 8 Regime and/or the DfT Revenue Support regime to increase the revenue support payments made to SSWT;

Now what happens?

Many have been askng what the real point of the Alliance was given the above clauses seriously limited any attempt to alter the already in-place contracts. The Alliance will end in August and the normal contractual relationships will resume NR says.

Network Rail said:

: The SWT-NR deep alliance was formed in April 2012, putting in place a single joint management team responsible for infrastructure and train operations on NR's 1000 km Wessex Route, which carries over 2000 trains a day.

This management structure and the associated commercial arrangements will now end. NR is to reintroduce the role of Route Managing Director, which will be assumed by current Infrastructure Director John Halsall, while deep alliance Managing Director Tim Shoveller will continue as Managing Director of SWT. This will allow SWT to focus on operational aspects while NR takes clear responsibility for infrastructure issues.

NR and SWT are to ‘retain the best and most successful parts of the alliance’, including the integrated control centre and capacity and planning teams. SWT stressed that ‘on a day to day basis, customers and most employees won’t see any difference’. Work to improve performance and increase capacity will continue, with ‘more extensive collaboration than anywhere else on the network’.

The changes are driven by the organisations’ internal needs, rather than by external pressure or regulatory requirements, and will enable them to keep their finances separate. But does this mean the Government are behind the changes?

More quotes...

‘We have learned a huge amount over the past three years’, said Shoveller. ‘It makes sense to have a look at our alliance with a view to continuing the areas that have worked really well, and stop doing the things that haven't. I'm incredibly proud of what the NR and SWT teams have achieved for passengers. The strong ethic of teamwork, close working and collaboration will continue as we reshape the alliance to concentrate time and resource on the most effective areas.’

What happens next?

It seems that the fully integrated control centre based at Waterloo, the one station team at Waterloo, integrated capacity and planning teams and the joint performance team will remain. These will help to deliver the biggest improvements seen on the Wessex route for decades said the press release issued just before the Transport Secretary ‘paused’ many projects on June 25.

Tim Shoveller said: "We have learned a huge amount over the past three years. It makes sense to have a look at our alliance with a view to continuing the areas that have worked really well, and stop doing the things that haven't.

“I'm incredibly proud of what the Network Rail and South West Trains teams have achieved for passengers. The strong ethic of teamwork, close working and collaboration will continue as we reshape the alliance to concentrate time and resource on the most effective areas."

The alliance says it has delivered a number of benefits such as reduced delays per incident, better train performance, a joint approach to managing the impact the weather has on the railway, and improved staff engagement.

The Scottish question

The recently started franchise in Scotland includes a deep alliance arrangement and will remain as it forms part of the franchise agreement and was designed to incorporate its managerial and financial structures. So the rail industry has another one-off arrangement to deal with and make work.

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